Govt Could Extend Excise Duty Cut For Automobiles

The Union Finance Ministry of India might extend the excise duty cuts given to the automobile industry beyond the deadline of December 31st, as sales are still weak.

Jayant Sinha, the minister of state for finance said, "It is under consideration." Arun Jaitley, has already said, "Let's wait till December 31."

P Chidambaram had earlier announced the excise duty cuts in the interim Budget, during February this year.

The former minister had had cut excise duty on small cars, two-wheelers and commercial vehicles to 8 percent, from 12 percent.

The duty on Sports Utility Vehicles (SUV) had been dropped to 24 percent from 30 per cent, midsize cars were dropped to 20 percent from 24 percent and large cars were cut to 24 percent from 27 percent.

The aim of this cut in excise duty was to help the automobile industry in India to increase sales, since the market was down.

The cut in Excise Duty was originally valid till June, was further extended till December this year by Arun Jaitley.

Factors such as low sales, discounts that were offered by carmakers and also the rising costs of making automobiles started taking a toll in their profits, so many manufacturers have hiked prices of their products from January 2015 onwards.

The automobile industry preferred that the Excise Duty cut to be prolonged for a little longer till the industry could register decent growth in India.